Strong Jobs Claims, Trade Deficit Shrinks

Initial Claims Remain Near 50 Year Lows

Initial jobless claims for the week ended April 28th rose marginally to 211k (near 50-year low) from 209k in the prior week, 14k better than the estimates of 225k.  Any number below 300k is commonly associated with a healthy jobs market, and the current labor market certainly fits the bill as workers continue to be retained by employers finding it increasingly difficult to attract new qualified applicants.  Separately, continuing claims fell 77k to 1.756 million (the lowest level since December 1973) for the week ended April 21st, beating the consensus estimate of 1.835 million.  Overall this is another strong data point ahead of the monthly payroll report due from the Labor Department tomorrow at 8:30am EST.   

Exports Up, Imports Down

According to today’s report from the Commerce Department, the international trade deficit in goods and services decreased by $8.7 billion to $49.0 billion for the month of March.  This represents a 15.2% narrowing in the trade gap, which is the largest reduction in the trade deficit in two years.  Further details of the report show that much of the change was driven by a 2% increase in exports, while imports were down 1.8%.  Furthermore, imports are expected to grow in the coming periods as consumer spending is expected to rise, and with it, US demand for imported goods.  The heavily scrutinized trade gap with China narrowed 11.6% during the period — a timely, positive sign given Treasury Secretary Mnuchin’s upcoming visit to China, where the sizable trade gap will be one of the major agenda items.  

Equity Markets Finish Flat

US stocks finished mostly unchanged on the day after rallying back from session lows ahead of tomorrow’s employment report and uncertainty around the trade negotiations in China.  All three major indices closed within 0.25% of where they opened the day, with the S&P and Nasdaq losing ~0.20% and the DJIA inching marginally higher (+0.02%).  US Treasurys rallied throughout the trading session, as yields/swap rates were down 1-3bp across the curve, with the 10-year note yield down 2.5 bps to 2.945%.  The US Dollar (USD) closed down 0.3% vs. the Euro (EUR) and up vs. the Pound (GBP) by 0.05%.  Crude oil futures were up 0.8% to $68.46/barrel on the news of heightened tensions surrounding the sanctions on Iran.